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Global Information and Communication Technologies Department

June 10, 2009

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Signs of crisis

• OECD area in full recession

• Global trade projected to fall in 2009

• Crisis spreading from developed to developing world

• Trillion dollar economic bailouts are the order of the day

• Coordinated interest rate cuts and stimulus packages, but where is the bounce?

• Well-known companies are being sold at bargain prices or slipping into bankruptcy

Percentage change in real GDP in high-income and developing countries, 1980-2010

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Some reasons to be cheerful!!

Previous downturns created opportunities for “creative destruction” and entrepreneurship– Korean broadband grew out of Asian Financial Crisis

– Google, Amazon and Skype survived the dot.com crisis and subsequently boomed

Telecom is often a lead indicator of recovery– Research shows that growth in international traffic volume is a lead

indicator of general economic recovery

Competitive pressure on operators is good for customers– Prices for mobile handsets, computer memories, netbooks or call

minutes are cheaper than ever before

Governments see ICT as integral part of recovery– US stimulus package includes US$7 billion for broadband

deployment in rural areas

Cost-cutting encourages network sharing– Shared infrastructure will assist network roll-out in geographic

areas that might otherwise be neglected in competitive markets

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ICTs can contribute to the recovery

SerbiaPakistan Malaysi

aThailand

UkraineBangladesh

7%

6%

5%

4%

3%

2%

1%

0%

Contribution of mobile comms to total GDP, 2007

Source: Deloitte, cited in World Bank (2008), “The role of mobile phones in sustainable rural poverty reduction”

High and rising contribution of mobile to total GDP (Deloitte: see chart)

Job creation: 3.6 million jobs created in India by mobile industry (Ovum)

Productivity increases through business expansion, employment search, entrpreneurship, mobile banking, lower transaction costs etc (Deloitte)

Critical mass in economic impact appears to be reached at 25% penetration (Vodafone, India study)

Increased tax revenue (GSMA)

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Crisis Response in a number of countries

Infrastructure Spending as a Fiscal Stimulus Measure…

Counter-cyclical public spending in infrastructure is an effective tool to create jobs and provide the foundation for economic recovery and sustained growth

The share of infrastructure spending in announced fiscal stimulus packages varies substantially across countries:

― So far announced infrastructure spending for 2009 represents on average 64 percent of the total stimulus in emerging market economies and 22 percent of the total stimulus in high income economies

Transformational opportunity to invest in “green” infrastructure and advanced information communications technologies (ICT’s)

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… and Broadband Infrastructure prominentin Stimulus Packages

Broadband Component as Percentage of Total

Stimulus Plans

0.0% 5.0% 10.0% 15.0%

Australia

Finland

Spain

Japan

UnitedStates

Canada 27.1

789.0

375.0

14.6

30.0

2.65

US$bn

CommentsComments

United States, Britain, Canada, Germany, Portugal and Finland have all included measures to expand broadband access and to bolster connection speeds in their planned economic stimulus packages. Australia, France, Ireland, Japan, Singapore and the Republic of Korea have announced separate broadband plans

Plans seek to speed up existing links to build faster fixed-line and wireless next-generation networks.

Another goal is to expand broadband connections to rural areas where they are currently unavailable, in some cases considering turning broadband into a universal service

United States, Britain, Canada, Germany, Portugal and Finland have all included measures to expand broadband access and to bolster connection speeds in their planned economic stimulus packages. Australia, France, Ireland, Japan, Singapore and the Republic of Korea have announced separate broadband plans

Plans seek to speed up existing links to build faster fixed-line and wireless next-generation networks.

Another goal is to expand broadband connections to rural areas where they are currently unavailable, in some cases considering turning broadband into a universal service

Source: “Broadband Infrastructure Investment in Stimulus Packages: Relevance for Developing Countries” , Christine Zhen-Wei Qiang, The World Bank, May 2009

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Response to the crisis from the World Bank Group

Infrastructure Recovery and Assets (INFRA) Response

• Timeliness

• Targeting

• Productivity and growth

Swift response inthe short term e.g. projectsready for implementation

Projects that have employment

generation potential and are agovernment priority

Projects that remove infra. bottlenecks and enhancelong term productive

capacity

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INFRA Platform – Key Steps Toward Roll-out

1.WBG on-going fundraising of US $45 billion• Financing specific to World Bank / IFC / MIGA initiatives

2.WBG promotion of the INFRA instrument by region• Initial presentations and discussions in Asia

3.Process initiated based on country request for support

4.Diagnostic tool implementation (by country/sector)

• ICT infrastructure viewed as “quick win”

― Can be initiated relatively quickly

― Labor intensive

― Considerable short-term employment generation potential

Some estimations predict that $5 billion stimulus would create almost 100,000 new jobs directly in short term and almost 2.5 million jobs as network effects (Communications Workers of America, 2008).